Peak oil - June 19

Many more articles are available through the Energy Bulletin homepagePeak Oil Passnotes: The Oil Wave RipplesEdward Tapamor, Resource Investor The Dow, the Nasdaq and the FTSE have all been centre stage. The rises, the dramatic falls, then the slight respite as we go to press. How the U.S. markets have seen 9% falls off of their heights. How it affects shareholders, business, investment. Everyone has been talking about it, the mass media have been all over it.

But here sits a primary problem of the way markets both act and are reported. All of which is centred around the reality of oil and energy and the way it is underreported on big networks and newspapers. Because if you watch, listen or read these news organs you might think that this problem was just something that affected the floor on Wall Street. But it is not so.

The U.S. and European markets have taken hits of anywhere from 9-12% it is true. But they did relatively well. In contrast India’s Sensex in Mumbai fell a terrifying 28%, in one month.

The basic reason is energy, and in the future the ones who will pay, are the weakest. It is the oil inflation chain, the ripples of the oil wave. (16 June 2006)

A Megaproject list from the Oil and Gas JournalHeading Out, The Oil Drum I would like to draw your attention to the recent listing by the OGJ of their version of the Megaprojects that are going to come on line between now and 2010. For those who have not been following this discussion, if a significant oil production project has not been started yet, then there are logistical reasons why it probably can't be put on line within the next four years. In the past year we have seen CERA and Chris Skrebowski both provide their lists, and now we have the latest list from the Oil and Gas Journal.

Unfortunately they did not sort it the same way as Chris did, nor did they do totals, so if there is the odd typo, blame it on having to enter 239 projects into a spreadsheet. So what is the result? Well they are more inclusive, and have broken some of the projects into phases, so that it makes it a little easier to see when the fields impact, in contrast to both the earlier studies. In simple numbers they anticipate 4.671 mbd addition in 2006 (CS had 4.015 mbd); 3.831 mbd in 2007 (CS has 3.756 mbd); 4.643 mbd in 2008 (CS 4.175 mbd); 6.613 mbd in 2009 (CS had 2.64 mbd) and 1.805 mbd in 2010 (CS had 2.610 mbd). However, for the dates that are in 2009 and beyond there are a significant number of projects that say 2009+ or so, meaning that the current schedule could well stretch. (18 June 2006)

The Most Powerful Force on EarthMartin Weiss, Safe Money Report via Free Market News ...If you’re a baby boomer like me, you and I have witnessed more people added to the world’s population in our lifetime than all the people added in all the centuries of history — and prehistory — that came before us.

The population explosion is beyond control. It has emerged as the single most powerful, immutable force on Earth, driving geopolitical change, stimulating economic growth and generating global inflation.

Ultimately, it is the most persistent — but least understood — factor underlying virtually everything we’ve been warning you about here in Money and Markets:

It is behind food prices, which are going up despite rapid advances in agricultural machinery ... despite the great strides of the “green revolution” ... despite the highest crop yields in history.

It is behind the cycle of debt. I’m talking about the greatest credit inflation the world has ever seen, including $41.7 billion in U.S. interest-bearing debts, $101.5 trillion in derivative debts, tens of trillions in U.S. government commitments for Medicare and Social Security, plus trillions more in Europe, Asia, Latin America and Africa. ...And ...

It is behind Peak Oil — the critical threshold beyond which world oil production will start to decline ... even with major improvements in extraction technology, even with more exploration, and even after a shift to alternative sources of energy. (19 June 2006)Weiss emphasizes population and inflation in this article. A more complete model of environmental impact is given by IPAT, described by Donella Meadows thusly:

To a small but influential bunch of global thinkers the abbreviation "IPAT" (pronounced "eye-pat") says volumes. It summarizes all the causes of our environmental problems.

IPAT comes from a formula originally put forth by ecologist Paul Ehrlich and physicist John Holdren:

Impact equals Population times Affluence times Technology. [I = PAT]

Which is to say, the damage we do to the earth can be figured as the number of people there are, multiplied by the amount of stuff each person uses, multiplied by the amount of pollution or waste involved in making and using each piece of stuff.

Beneath the deck, there's no such tranquility. A 200-person crew of geologists, engineers and technicians work around the clock at dimly lit keyboards, controlling every move of an adjoining oil rig as it uses an 16 1/2-inch pipe to bore through the ocean floor to a depth of more than five miles.

The Chevron Corp. crew is developing a deepwater oil field 190 miles off the Louisiana coast that's projected to produce 100,000 barrels of oil a day by 2008 and 500 million barrels overall.

It's the kind of discovery once thought to be out of reach, but with improved technology and climbing global oil prices, companies are spending billions developing oil fields the Interior Department says will substantially boost Gulf production.

Deepwater exploration -- done in depths of 1,000 feet of water or greater -- is also volatile, as companies face increasing development costs, a battle with the federal government over royalty payments and continued rig shortages. And hurricanes Katrina and Rita illustrated a seasonal threat that curbed deepwater exploration last year in addition to damaging 113 rigs and temporarily shutting down 28 percent of the nation's refining capacity...

The ship is connected to the Gulf's floor by 4,300 feet of metal casing that surrounds the pipe and is fastened to the sea floor by a valve, which helps prevent accidents and contamination.

Crews on the ship work at computer screens and control panels to push the pipe and a drill bit into the ground about 80 feet per hour. An unmanned mini-submarine is used to collect sediment samples on the sea floor and monitors drilling progress.

Drilling starts by setting a 36-inch diameter steel casing about 300 feet into the seabed. Smaller casing gets connected until the well resembles an inverted extended telescope. It takes more than 1 million pounds of pipe to complete a well.

The entire process takes place in water pressure reaching 20,000 pounds per square inch and temperatures hitting 400 degrees. (16 June 2006)

A Crude AwakeningBill Moore, EV World Interview with Swiss television journalist Basil Gelpke on his new 90-minute documentary on peak oil. ---- If you think energy-conscious Europe is more aware of Peak Oil than North America, think again, says Swiss television journalist Basil Gelpke, currently in the United States debuting his new documentary "A Crude Awakening: The Oil Crash" at various film festivals. EV World caught up with him by telephone in Newport, Rhode Island. He had only a few minutes to talk before driving up to Boston and eventually catching a flight back to Switzerland.

"A Crude Awakening looks into the question at how much fossil fuels we still have on this planet," he said, explaining that it looks primarily at oil and gas reserves.

Gelpke, who was worked for a decade in television news, said that he's covered a lot of stories and seen a lot of things and he isn't easily impressed...

"But when I came across the story of peak oil, I got really worried. I couldn't believe it at first, but then I started doing some research and I feel this is the most important story that I've come across in my lifetime as a television journalist, which is really my background."

...Gelpke believes the world needs a "wake up call" on this issue, one that he hopes "A Crude Awakening" will help provide. The film will be debuted in other film festivals around the United States with the goal being wider cinema distribution, which he admits is a tough, competitive field. Interestingly, one reviewer said of the film, "This is the best independent horror move this year. Oil Crash packs an emotional and informative punch that may just be the most important film of the decade." (19 June 2006)See original article for links and a video of the full 15-minute interview.

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